Vietnam's central bank announces first exchange rate under new mechanism

PHOTO: Vietnam News/ANN

HA NOI (VNS) - The central bank today listed the average inter-bank exchange rate at VND21,896 per American dollar, six dong higher than the previous level.

This is the first time the State Bank of Viet Nam has quoted a reference rate following the new exchange rate mechanism that it announced in Decision No 2730/QD-NHNN, dated December 31, 2015.

The decision said the central bank would set a "central exchange rate" every day, instead of maintaining a fixed rate for a long period of time. The trading band of the new rate continues to be plus or minus three per cent.

The ceiling and floor rates remain almost unchanged with today's minor adjustment.

The central bank said the dollar/dong rate would be now be based on the exchange rate changes in the inter-bank foreign exchange market, as well as monetary developments in countries that are involved with Viet Nam's trade, investment and financing to a major extent.

The daily-adjusted rate was to be in line with macroeconomic balance and would be the basis for local credit institutions and foreign banks' branches to provide their foreign exchange services, it said.

The central bank said such a mechanism would enable it to ensure its management directions, while letting the exchange rate move flexibly as per global monetary fluctuations.

These are part of its measures to improve the position of the Vietnamese currency, stablise the foreign exchange market and the economy, and support production and businesses activities.

The central bank would carry out comprehensive monetary measures and was willing to sell foreign currencies, if necessary, for proper exchange rate developments and a stable foreign exchange market, it said. - VNS